Greece finally capitulated and appealed to the International Monetary Fund for help today after months of suffocating pressure from the international bond markets.

Its economics ministry formally invited the IMF and the European Union to work on the specifics of a €45bn (£39bn) bailout programme, in the first official recognition that it may not be able to service its mounting debts without outside help.

An IMF team is expected in Athens next week, in a move which may lead to severe austerity measures and public budget cuts.

"Markets have no patience – when they cut you off, they cut you off. It's a matter of trust between the borrower and the lender, and Greece has done things wrongly in the past," an official close to the Greek government said. "If you're weak, the vultures will come to you, it's the law of life."

The Greek collapse has also been exacerbated by a political divide within the EU. While France and Spain supported a bailout package from the start, German chancellor Angela Merkel refused to finance any deal. Weeks of uncertainty over whether the EU would act alone to support Greece has failed to reassure investors, who want more guarantees that they will get their money back, and the cost of borrowing has shot up in recent days.

The opening of talks does not mean that the €45bn bailout package will be activated imminently. Officials still hope the invitation to the IMF will calm markets, reducing the need to use the aid itself, but tonight investors widely interpreted the decision as a positive sign.

"This is a very good move, it's the start of a set of good news, the risk won't expand," said Ashok Shah, chief investment officer at London Capital, a fund management firm. "Going to the EU and the IMF gives them credibility and support, it helps calm things down."

Talks with the IMF and EU will last until the end of the month. Then, Greece will decide whether it draws on the funds made available at a 5% rate, less than the 7% that investors demand at present to lend to the beleaguered country.

Yields on Greece's 10-year bonds had reached 7.38% – almost twice as much as Britain's – a level "which Greece cannot afford to issue at and still hope to slash its budget deficit," said Jane Foley, research director at Forex.com.

The country needs to raise another €35bn (£31bn) this year to refinance its debt, of which €10.5bn must be raised by the end of May. During a four-month power struggle, investors have bet Greece would not be able to raise the funds. The so-called bond vigilantes, or activists bond investors, also pushed Greece into draconian measures to slash its 12% budget deficit and then to seek support from the EU. Initial reassurances from Europe's ruling body were not enough to ease the market, which demanded more details, while selling the bonds, pushing yields higher.

The crisis has already cost Greece an internal revolt, as unions and citizens protest against the budget cuts, and the situation could get worse, Citigroup warned in a note to investors. The reforms "will go well beyond the tightening measures that Greece has put in place up to now, which may help to reduce the deficit for 2010 but do little to tackle Greece's long-term solvency issues," it said.

In a desperate move to avoid such a scenario, Greece may still try to raise more funds in the market, analysts said. "We think Greece will still try to raise funds from capital markets before actually asking for external help from the IMF," Citigroup said. "However, we think that eventually such external help may be necessary, possibly at some point in May."

After pushing Greece into the direction they wanted, the vigilantes may now pick on another financially weak country, market participants say. "The two most likely candidates are Portugal and the UK," Shah said. "With [Britain's] election in full swing, and talking about budget cuts, but with no transparency, there will only be more confusion."

The cost of protecting Portuguese debt against a potential default soared to $190,000 for $10m of debt, up from $177,000. Spain's rose to $147,000 from $140,000, according to data from Markit. "Portugal and Spain have been sucked into the maelstrom, with both widening significantly today – the resilience shown in recent weeks started to crack," said Gavan Nolan, an analyst at credit data provider Markit.

The European commission published an assessment of the Portuguese growth and stability programme, urging the country to be ready to adopt further measures if needed.

Only one thing seems certain: "You must expect more speculative attacks to surface in the market place," Shah said.